Private banks at high risk of losing customers: IBM study

Private sector banks in India are at a greater risk of losing their customers on account of non-satisfactory services as compared to public sector banks

New Delhi: Private sector banks in India are at a greater risk of losing their customers on account of non-satisfactory services as compared to public sector banks, says a study by technology giant IBM.

Conducted by research firm IDC, the study titled ‘Understanding the Indian Retail Banking Customer’ says push marketing is fast becoming obsolete and the thrust should be on creating brand advocates.

“An interesting finding describes that while multi-banking is picking up- reflecting customers’ desire to diversify deposits and associated risks — private sector banks are at a higher risk of losing their customers to others as compared to PSU banks due to non-satisfactory customer services,” it said.

Ensuring quality experience is critical for customer acquisition and retention, it added.

The study is based on replies from over 5,000 customers spanning across 10 banks (5 public and 5 private) in the country.

Fifty per cent of the respondents said they acquire information about banks through word-of-mouth and 2.4 per cent churn is expected among primary bank customers within one year, it said.

Technology can help provide continuous enhancement and support for front-end process automation tools through analytics solutions and intuitive digital channels. This will help in providing quality service through ease of use, speedy transactions, better accessibility and personalization for customer acquisition and retention.

The study further said that 41 per cent of private banks customers transact with more than one bank, versus 24 per cent of PSU bank customers.

Also, 86 per cent of the 41 per cent customers of private banks possess accounts at PSU banks as well, it added.

“Banks are increasingly realising the need to give their customers a more holistic, seamless experience throughout the value chain. The need of the hour is to understand individual consumer’s transactions and nuances of their unique investment behavior,” IBM ISA Leader and VP (BFSI) Venkatramani Subramanian said.

Integrated and consolidated solutions by IT partners become imperative as technology will drive business priorities of banks in the future, he added.

“The survey reveals that word-of-mouth is a source for more than half of customers which shows that the days of push marketing are over and creating brand advocates is a priority,” Subramanian added.

Eighty-seven per cent of the customers covered in the survey said they have only one account with their primary bank and only 58 per cent of their investments lie with them.

This provides potential business opportunities for other banks to take advantage of the remaining 42 per cent of the customer’s investments with the help of analytics backed personalization, IBM said.